Latest news with #Guyana
Globe and Mail
a day ago
- Business
- Globe and Mail
ExxonMobil's Core Upstream Growth Engines: Permian and Guyana
Exxon Mobil Corporation XOM has a strong portfolio of upstream assets, centered around oil-rich prolific resources in the Permian Basin and offshore Guyana. Production costs in those assets are low. Therefore, the leading integrated energy major can weather a challenging business environment when oil and gas prices turn unfavorable. With a strong focus on strengthening its presence in the Permian, ExxonMobil completed the acquisition of Pioneer Natural Resources Company on May 3, 2024. With 1.4 million net acres of the combined company in the Delaware and Midland basins, and an estimated 16 billion barrels of oil equivalent resources, ExxonMobil has greatly transformed its upstream portfolio. Similar to its operations in the Permian, ExxonMobil boasts a robust project pipeline in offshore Guyana resources. Despite this operational strength and resource depth, near-term challenges remain. ExxonMobil recently disclosed in an 8-K filing that it expects earnings for the second quarter of 2025 to be hurt sequentially by lower oil and natural gas prices. With exploration and production activities contributing mostly to XOM's bottom line, a weaker commodity pricing environment in the June quarter of this year is a concern, even as the company continues to deliver long-term growth from its world-class assets. CVX & FANG Also Have a Strong Position in Permian Both Chevron CVX and DiamondbackEnergyFANG are leading energy players having a strong presence in the Permian Basin. In the Permian, the most prolific basin in the United States, Chevron is among the largest producers of oil and gas. Production contributions from the Permian have been aiding CVX's bottom line. Diamondback is a pure-play Permian producer. Hence, FANG is well-positioned to gain from producing at a low-cost asset. FANG has been increasing its total Permian acres over time. XOM's Price Performance, Valuation & Estimates Shares of XOM have declined a marginal 0.5% over the past year against the nominal 0.7% gain of the composite stocks belonging to the industry. Image Source: Zacks Investment Research From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 6.73X. This is above the broader industry average of 4.27X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for XOM's 2025 earnings has been revised upward over the past seven days. Image Source: Zacks Investment Research XOM stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
3 days ago
- Business
- Yahoo
Big Oil's Power Couple Heads to Guyana
Following the completion of Chevron's acquisition of Hess Corporation, the U.S. supermajor will need to overcome a previously strained relationship with its biggest competitor at home, ExxonMobil, and work together as joint venture partners in the hottest oil province in the world, Guyana's offshore oil treasure trove. Chevron's foray into the fastest-growing exploration and production spot globally could also be a sign of what's to come for the biggest international oil and gas majors. Big Oil may be looking to acquire smaller companies with prized assets to boost reserves amid lower spending on exploration within the industry over the past five years. For Chevron, the acquisition of Hess, whose completion was announced last week, means the supermajor is now gaining 30% in Guyana's Stabroek offshore block—where the operator ExxonMobil is leading the production of more than 660,000 barrels per day (bpd) from several projects in the block. Chevron's deal was finalized after a more than a year-long arbitration battle initiated by Exxon, which challenged the Chevron-Hess deal, claiming it had a right of first refusal for Hess's stake under the terms of a joint operating agreement (JOA) for the Stabroek block. Hess and Chevron claimed the JOA doesn't apply to a case of a proposed full corporate merger. The arbitration case has reportedly strained the relationship between the top executives of the two biggest U.S. oil firms. In the legal fight, Chevron had much more to lose than Exxon because Guyana's resources were the key reason for pursuing Hess Corp, more than the reason for adding producing assets in the Bakken shale basin in North Dakota. With the arbitration ruling in favor of Chevron, the company announced the completion of the Hess acquisition, 'following the satisfaction of all necessary closing conditions, including a favorable arbitration outcome regarding Hess' offshore Guyana asset.' 'The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders,' Chevron chairman and CEO Mike Wirth said in a statement. Chevron now owns a 30% position in the Guyana Stabroek Block, which has more than 11 billion barrels of oil equivalent discovered recoverable resource. Exxon is the operator of the Stabroek block with a 45% stake, and China's state firm CNOOC has the remaining 25% stake. The new shareholding composition of Guyana's prized oil asset means that Exxon and Chevron must put hard feelings aside and cooperate to boost their production and profits from the Stabroek block. The asset has a lot to offer, in terms of resources and money, to a company like Chevron, whose reserves replacement ratio has declined in recent years, and its oil and gas reserves have now reached the lowest level in at least a decade. During the past 10-year period, Chevron's reserves replacement ratio was 88%, it said at the Q4 earnings call in January. A ratio below 100% means that Chevron is depleting reserves faster than it can replace them. So far this year, Chevron has expanded production in Kazakhstan and started up production at the Ballymore oil project in the U.S. Gulf of Mexico. Guyana's offshore oil field is a top-performing asset with the potential to yield even more barrels and billions of U.S. dollars for the project's partners. Both Chevron and Exxon will benefit from Stabroek even at relatively lower oil prices, because the Guyana block is estimated to have a breakeven oil price of about $30 per barrel. Production capacity in Guyana is expected to surpass 1.7 million barrels per day, with gross production growing to 1.3 million barrels per day by 2030, Exxon says. Following the bitter arbitration dispute, Exxon and Chevron now must work together in Guyana, as they do in Kazakhstan and Australia, for example. 'Partnership is one of our core values, and we pride ourselves on being a good partner around the world with many, many different companies,' Chevron's Wirth told Bloomberg last week. 'We partner with Exxon on projects elsewhere in the world and have for many many years, and I'm sure we will find a way to move forward.' Exxon welcomed Chevron to the joint venture in Guyana, signaling that Big Oil will collaborate on multi-billion-dollar projects to maintain a high reserves replacement ratio, production, and profits. By Tsvetana Paraskova for More Top Reads From this article on
Yahoo
4 days ago
- Business
- Yahoo
Chevron completes $53bn acquisition of Hess
Chevron has completed the $53bn acquisition of Hess, following the fulfilment of all necessary closing conditions. The development follows a favourable arbitration outcome regarding Hess' offshore asset in Guyana. This strategic move consolidates Chevron's position in the global energy market with a highly advantaged and differentiated portfolio. The acquisition introduces premier assets to Chevron's portfolio, including the Guyana Stabroek Block and the US Bakken formation. Additionally, the Federal Trade Commission (FTC) reversed its prior restriction, allowing John Hess to join Chevron's Board of Directors, pending Board approval. Chevron chairman and CEO Mike Wirth said: 'This merger of two great American companies brings together the best in the industry. 'The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders. Additionally, I am pleased with the FTC's unanimous decision. John is a respected industry leader, and our Board would benefit from his experience, relationships and expertise.' Chevron has gained a 30% stake in the Stabroek Block in Guyana, which boasts more than 11 billion barrels of oil equivalent in discovered recoverable resources. Additionally, Chevron now controls 463,000 net acres in the Bakken, as well as complementary assets in the Gulf of America producing 31,000 barrels of oil equivalent per day (boepd) and natural gas assets in South East Asia with 57,000boepd. Hess CEO John Hess said: 'We are proud of everyone at Hess for building one of the industry's best growth portfolios including Guyana, the world's largest oil discovery in the last ten years, and the Bakken shale, where we are a leading oil and gas producer. 'The strategic combination of Chevron and Hess creates a premier energy company positioned for the future.' Under the merger agreement's terms, Hess shareholders will receive 1.0250 Chevron shares for each Hess share, resulting in Chevron issuing approximately 301 million shares of common stock from its treasury. Chevron-owned shares of Hess stock, amounting to 15.38 million shares, were cancelled without consideration at the closing of the transaction. The acquisition is expected to be accretive to Chevron's cash flow per share in 2025, following the realisation of synergies and the start-up of a fourth floating production storage and offloading vessel in Guyana. It is expected to increase Chevron's production and free cash flow growth rates over the next five years and extend this growth into the 2030s. Chevron's combined capital expenditure budget is projected to range from $19bn to $22bn. Post-acquisition, the company aims to maintain a double-digit return on capital employed at mid-cycle prices and achieve run-rate cost synergies of $1bn by the end of 2025. "Chevron completes $53bn acquisition of Hess" was originally created and published by Offshore Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
4 days ago
- Business
- Yahoo
Chevron's $53B deal for Hess clinches access to a 'once-in-several-lifetimes' asset for the oil giant
After nearly two years, Chevron (CVX) looks set to close its $53 billion deal to buy rival Hess (HES) and clinch access to one of the most significant oil discoveries in decades. On Friday, an arbitration panel at the International Chamber of Commerce in Paris ruled that Chevron has the go-ahead to close its all-stock purchase of Hess, shutting out rival major bidder ExxonMobil (XOM) and ending one of the biggest standoffs the oil and gas industry has seen in the last 50 years. After rising early Friday following the news, shares of Chevron were off about 1.5%. The deal, which Chevron and Exxon have been locked in competition over since 2023, is focused on Hess' 30% stake in the generationally rich Stabroek offshore block of oil fields off the northern coast of Guyana. The play is estimated to hold more than 11 billion barrels of oil, according to reporting from Reuters. This is a "once-in-several-lifetimes type of asset," David Sweeney, co-head of the global energy and resources sector at international law firm Clifford Chance, told Yahoo Finance. The project has also played a role in turning Guyana, historically one of the poorest countries in the West, into the second-fastest-growing economy in the world, according to the most recent data available from the International Monetary Fund published in April. 'This merger of two great American companies brings together the best in the industry,' Chevron Chairman and CEO Mike Wirth said in a public statement from the company. 'The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders." When reached for comment, Hess referred to Chevron's public statement. Exxon, which currently operates the block and holds a 45% stake, has been partnered with Hess on exploration activity in Guyana since 2014, when Hess bought out Shell's (SHEL) stake in the project. Exxon is also partnered with the China National Offshore Oil Corporation (CNOOC), which holds a 25% stake. "We disagree with the ICC panel's interpretation but respect the arbitration and dispute resolution process," Exxon wrote in a statement following the ruling. "Given the significant value we've created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become." Shortly after Chevron announced its plan to acquire Hess for $53 billion in October 2023, Exxon moved to block the deal, arguing alongside CNOOC that its partnership agreement with Hess gave Exxon a preemptive right to match Chevron's offer for Hess' 30% stake. That contention had been the central debate among the ICC arbitration panel. "The majors ... are always opportunistic and smart about what they do, so if there is something out there that is worth acquiring, likely they will be willing to acquire it," Sweeney said. Among the majors — the world's biggest fully vertically integrated oil and gas companies, composed of Exxon, Chevron, BP (BP), Shell, TotalEnergies (TTE), and Eni (E) — Exxon and Chevron lead the pack. But this deal has been seen as key to Chevron's success, as the company has lagged behind Exxon in recent years. Chevron's earnings fell from $24.7 billion in 2023 to $18.3 billion in 2024, and in February of this year, the company announced its intent to cull up to 20% of its workforce, or 8,000 employees, by the end of next year. Chevron's stock price has also largely lagged behind Exxon's, growing by roughly 71% over the last five year's compared to Exxon's upward rise of just less than 150%. The S&P 500 has gained about 95% over that same period. "This accretive transaction is expected to drive significant free cash flow and production growth into the 2030s," Chevron CFO Eimear Bonner said in the company's public statement following Friday's news. "The proposed Hess deal would be transformative for Chevron, adding advantaged oil volumes ... and provide geographic diversification," analysts at Bank of America wrote in a note on July 10. The firm also expects the deal to drive free cash flow, which will put Chevron in a stronger negotiating position for a contract extension on its ownership of a major oil play in Kazakhstan. The Chevron-Hess merger is one of the largest M&A transactions in the energy sector in the last couple of years, falling just shy of Exxon's $60 billion acquisition of Permian Basin-concentrated exploration and production company Pioneer Natural Resources, which closed in May 2024. The sector has already seen more than $150 billion in deal value through the first half of 2025, according to a report from PwC. The report noted that the "how we fuel and power" domain, which encompasses the race to generate power for AI infrastructure, is projected to cross $6 trillion in value by 2035. While this deal isn't necessarily predictive of megadeals to come from the majors or in the oil and gas space writ large, Sweeney told Yahoo Finance, a large-scale deal like this is likely to push other companies in the sector to start looking at potential moves. "I would look at it and ask myself, if I was buying and selling assets and running them, 'Alright, is there something I can make out of this plus a number of other different acquisitions that I can cobble together?'" Sweeney said. "The industry is going to be around, and every time there's an acquisition like this — because this is just one of many — it tends to spur opportunities." Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. 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Zawya
4 days ago
- Business
- Zawya
Chevron wins Exxon case but loses time, oil and billions
Exxon Mobil has lost its arbitration challenge to block Chevron's $55 billion Hess acquisition deal, but the top U.S. oil producer managed to delay the tie-up by over a year, costing its rival billions in lost Guyana oil revenue and slowing integration. Chevron's deal, first announced in October 2023, closed on Friday after a drawn-out dispute over Hess's 30% stake in Guyana's Stabroek block, the most attractive asset in its portfolio. The offshore oilfield holds more than 11 billion barrels of oil and is one of the fastest-growing oil production regions in the world. The No. 2 U.S. oil producer had originally targeted a mid-2024 close for the deal. Exxon, which operates the Guyana project and holds a 45% stake along with Hess and CNOOC, challenged the merger through arbitration, citing a right of first refusal on Hess's Guyana assets. "The delay kept roughly 180,000 barrels per day (bpd) of Hess oil, about $6-7 billion in gross sales and $3 billion in profit, just from Guyana's Stabroek Block sailing past Chevron's till in 2024, because those barrels kept flowing to Hess while the lawyers argued," said Michael Ashley Schulman, chief investment officer at Running Point Capital. Chevron's deal was part of the biggest wave of consolidation in the oil industry for over 20 years and was a strategic counter to Exxon's own blockbuster deal and growing position in the Permian. For Chevron CEO Michael Wirth, acquiring Hess and its stake in Guyana was central to his strategy for the company's future growth. That strategy had been in limbo during the arbitration, turning what was initially expected to be a clean, timely win for Chevron into a high-stakes challenge for Wirth, who had already lost one major deal. He abandoned his takeover bid for Anadarko Petroleum in 2019 after being outmanoeuvred by Occidental Petroleum's higher offer. OVERHANG ON CHEVRON'S STOCK With the Hess deal now closed, Chevron said it expects to realize $1 billion in run-rate cost synergies by the end of 2025 and will cut jobs due to overlapping roles between the two companies. Chevron is in the midst of laying off up to 20% of its global workforce, has faced a rise in safety issues, and its operations in Venezuela have been caught in a geopolitical crossfire. "For Chevron, this favorable ruling helps the major avoid other time-consuming (and likely costly) approaches for inorganic growth," said Atul Raina, vice president at Rystad Energy. "Had the ruling gone in favor of Exxon Mobil and CNOOC, Chevron would then have had to look for growth opportunities elsewhere ... this would have most likely translated into Chevron paying large premiums for buying premier U.S. shale assets that move the needle for the major," Raina added. During the arbitration, Chevron had prepared for the integration of Hess business, purchasing $2.2 billion in Hess shares and issuing $5.5 billion in long-term debt, according to Jefferies analysts. The arbitration itself was also costly, Schulman said. "Add an estimated $50-100 million in arbitration fees and white-shoe billable hours, and you start to see why Mike Wirth's victory lap feels a bit like winning the Indy 500 on three tires," said Schulman. By contrast, Exxon's own $60 billion acquisition of Pioneer Natural Resources, announced the same month as Chevron's deal, closed by May 2024. That deal gave Exxon a bigger position as a shale producer in the top U.S. oilfield, the Permian basin. Since announcing the Hess deal, Chevron shares have declined about 9%. Exxon's stock is up just over 1% since unveiling its Pioneer acquisition, a divergence reflecting investor sentiment around timing and execution. Some of that gap was closed on Friday as Chevron stock fell nearly 1% while Exxon fell nearly 3%. RBC analyst Biraj Borkhataria said the arbitration had clearly been an overhang on Chevron's stock, with many investors choosing to stay on the sidelines during the drawn-out process. "Investor sentiment has shifted multiple times over the last eighteen months, usually based on either Exxon or Chevron commentary at industry conferences, both expressing how 'confident' they were of winning," Borkhataria said in a note.
